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Taiwan PV Industry Lays Hopes on The Asian Market

Published: Dec 07,2015

This article discusses the global PV industry and market changes in 2015. In the following, the production values of the key PV markets such as China, USA, Japan, etc. will be estimated, along with market scale changes, policy developments and market trends.

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In addition, it will predict the production value of Taiwan's photovoltaic (PV) industry and further analyze the status of the industry and the development trend of the main manufacturers.

A comprehensive perspective on the global PV market change and the future development trend are also in the focus.

Summary of global PV market status and output values The progress of the Chinese market was slowed down in the first half of 2014 due to the setback in the promotion of the policy and was thus failed to meet the expected total value at the end of the year.

Figure 1 :   Global PV market capacities by regions
Figure 1 : Global PV market capacities by regions

Another main market Japan is going to have a dramatic modification of the PV policy as the country is experiencing surge in the installation and is trying to cool down a bit, which will become an unpredictable factor in the future Asian PV market.

However, since the demand in the Asian market in 2014 remained high, and the home-type market gradually opened up thanks to the strong promotion of the policy in the Asian countries, this region continued to grow in terms of the global total demand. The global PV market capacities by regions are shown in Figure 1.

In addition, since early in 2014, the investigation on the China-US anti-dumping and countervailing duties requested again by Solar World (referred to as the "dual

investigation" hereafter) also caused quite some turmoil in the year as the dual -investigation results will directly affect the prices of the end products in the US market. After the initial judgment by the U.S. Department of Commerce on

July 28, 2014, Taiwan solar manufacturers were wrongfully punished for one quarter.

In addition, suffering from the result of the first dual investigation and considering the impact of energy on its global competitiveness, China began to actively pursue policies and expand the domestic solar power generation market. It was expected that a series of policies on distributed generation (DG) would drive the growth of installations in the country and make a breakthrough in 2015.

However, there was no positive response from the solar DG market during the first half of 2014 after China introduced the policies. The installation capacity during the period was only 3GW, less than a quarter of the predicted 13GW. The global PV market capacity is shown in Figure 2.

Figure 2 :   Global PV market capacities by year and forecast
Figure 2 : Global PV market capacities by year and forecast

The US market, on the other hand, maintained the steady growth trend of 2013, and is expected to have an installation capacity of approximately 6.4GW for solar power generation systems in 2014 with an annual growth rate of 40%, a slight increase of 3% as compared with 2013. Most of the European market has been showing a slowdown.

In 2014, the total installation capacity of the whole region fell below 10GW. Except for the UK, then installation capacity of most European countries declined to less than 1 GW, including Italy, Greece, Romania, etc. as they continue with the downward trend.

Although Germany maintained a total installation capacity of 2GW or so, it saw a significant decline of 40%, which is an indication of the country's future attitudes towards subsidies to PV industry.

For the overview of the global market growth in 2015, although China planned a total installation capacity of 11.8GW for 2014, in which about 7.6GW belongs to decentralized PV system. The installation progress of decentralized PV systems in the first half of the year was not satisfactory.

However, as the new policy will remove the restrictions on decentralized PV systems, the total capacity should increase in the future. In Japan, despite a significant growth of 38% in 2014, as the government is gradually shifting to the promotion of residential solar power generation as the new focus of its policy, a major growth of the market will be very difficult. However, the room for growth remains large.

The United States is expected to see a higher growth due to the expiration of the PV subsidization in 2016. Therefore, the development of the top three markets: China, Japan and the United States will drive the global demand for PV system, with all the major markets moving towards the residential systems, which will trigger another wave of growth in system components and micro-inverters.

Taiwan's PV Industry

The sales performance of Taiwan's solar cells have been boosted by the surging demand in the major markets such as China, Japan, the United States. Despite the impact of China-US dual investigation, which made Taiwan's solar energy growth lower than the global average, the annual output value still grew by 11%.

Figure 3 :   Taiwan PV output values by year and forecast
Figure 3 : Taiwan PV output values by year and forecast

Impacted by the dual investigation, Taiwan's PV industry, considering the future strategies and changes, must seek to coexist with the Chinese operators, its biggest competitor, and find a way to exist independently. This section will provide a comprehensive introduction and analysis of the development of Taiwan's photovoltaic industry and its development in 2015.

Taiwan's PV production value

As shown in Figure 3, the total production value Taiwan's solar industry totaled NT $ 170.1 billion in 2014 as compared with NT$ 152.6 billion in 2013 for an annual growth rate of about 11%. In 2014, impacted by the US's dual investigation towards China, a gap of performance between the first and second half of Taiwan's solar industry appeared. During the first half of the year, due to the expanded regulatory impact of the dual investigation on China overseas, the China's demand for Taiwan's solar cells increased by 32%. The ruling of the anti-dumping case at the end of July compounded the US-China dual investigation issue, which made it unnecessary for China to purchase.

Meanwhile, the United States, Taiwan's third largest third solar cell export destination, slashed its purchase from Taiwan, which had a strong impact on the sales of Taiwan's solar cell makers in August. The adverse situation continued until one month later when Motech and other Taiwanese companies questioned the result of the anti-dumping judgment and the ruling was changed to allow reduction of the tax rates on Taiwan-made solar cells. This, coupled with the launch of new complementary measures for the new solar energy policy by China, allowed the quantities of Taiwan's solar cells sold to China to rebound by the end of the year.

Status of Taiwan's PV industry

Affected by factors such as global demands for solar cell modules staying strong and the U.S. anti-dumping investigation, the production value of the upstream ingots and silicon wafers grew by 23% in Oct. 2014 as compared with the same month of the previous year. On the other hand, the production value of the third quarter declined by 2% over the same period of previous year, showing that the upstream sector of Taiwan's solar industry was not affected by the dual investigation in terms of demand.

While the performance of midstream and downstream sectors was affected by the US's dual investigation, both the overseas purchase price of and demand for Taiwan's solar cells experienced a setback. Therefore, the performance of the upstream silicon material sector and mid-stream cell sector of Taiwan's solar industry in 2014 appeared differently as the former had a growth rate of 26.5% and latter had only 6%.

In addition, to cope with today's ever-unpredictable solar business environment and low-price competition from China, Taiwan's solar industry has sped up vertical and horizontal cooperation or merger, including the acquisition of Sunrise Global Solar Energy and ALEO, a highly-effective monocr ystalline module maker in Germany by Sino-American Silicon.

The merger is expected to expand the production capacity of monocrystalline solar cells to 850MW and Sino-American Silicon invested in Accu Solar Corp., a downstream system maker in early 2014. As shown in Table 1, Motech also announced consolidation with the Topcell Solar at the end of 2014.

Figure 4 :   Consolidations of global solar cell plants in 2014
Figure 4 : Consolidations of global solar cell plants in 2014

After the merger, Motech will have a production capacity of about 3.0GW to catch up with the Hanwha, the world's top producer (3.28GW) and Yingli, the second largest producer (3.0 GW). When Motech increases the capacity of its plant in Kunshan, China from 600MW to 1GW, it will then have a chance to overtake the Hanwha and Yingli to have the largest plant capacity in the world and can effectively improve the its cost competitiveness against the Chinese makers. Furthermore, through the merger with Topcell Solar, Motech's total production capacity of monocrystalline solar cells will increase from 200MW to 450MW.

At present, there is an apparent increase of both horizontal and vertical consolidation among the solar power plants in Taiwan. It is expected that the big players will always staying big, the production capacity of 2.5GW ~ 3GW will become the threshold of the big players. It is very interesting to see who will go beyond the threshold in the future.

In 2014, there was a significant increase in the production of monocrystalline solar cells by the manufacturers. They are getting ready for the future PERC market and expect to gain an upper hand advantage with the growth of monocrystalline market.

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